Group Managing
Director’s review

Overview

The Group delivered a resilient performance in 2024, in the face of continuing significant headwinds. There was a strong contribution by Astra, enhanced by the Group increasing its shareholding in JC&C by 6.7% during the year, and a substantial recovery from DFI, but contributions from a number of our portfolio companies – and in particular Zhongsheng and Hongkong Land – were lower. Our portfolio companies are focused on addressing the short-term challenges they face from local and global economic pressures.

Our long-term success has been built on our resilience and our ability to adapt to the ever-changing environment in which Jardines and its portfolio companies operate. We demonstrated this adaptability during the year by reviewing and recalibrating our approach to running our portfolio of businesses.

Our role as an engaged investor

As we transition to being a long-term, engaged investor in our portfolio companies, we have the aim of delivering strong, long-term returns for the Company’s shareholders, with superior five-year Total Shareholder Returns (TSR). To achieve this ambition, we expect our portfolio companies to focus on growing their businesses to deliver strong, sustainable growth in earnings and cash flows, and on driving returns on invested capital well above the relevant cost of capital. We will also continue to evolve our portfolio, with a view to delivering higher long-term returns and capital appreciation. With high-quality execution in our portfolio companies and at the Group, we intend to deliver superior growth in the Group’s Net Asset Value (NAV) per share, as well as progressive dividends.

In order to meet our financial objectives, we have sharpened our focus on the key elements of our role as an engaged investor: at the Corporate level, aiming to manage the portfolio decisively, leveraging disciplined capital allocation and investment expertise; influencing strategy and driving accountability through representation on the boards of our portfolio companies; ensuring high calibre leadership teams are in place in our portfolio companies; and incentivising those teams to build bigger, stronger businesses, supported by highly qualified boards with extensive industry expertise.

Set out below is a summary of how Jardines has fulfilled its role as an engaged investor over the past year:

Ensuring highly-qualified boards and leadership teams are in place

Identifying, developing and retaining effective leadership talent remains a top priority, and over the past year our portfolio companies, supported by Jardines, have put in place appropriate management structures and strong leadership teams to support their revised strategies and future growth.

Our listed portfolio companies are also implementing new incentive structures, to better align the performance of their leadership teams with the creation of long-term shareholder value.

We continue to invest in the ongoing development of our leaders, providing them with opportunities to build expertise and advance their careers within various businesses across the Group.

We are also dedicated at the Jardines level to nurturing the next generation of leaders within our portfolio companies. We provide our colleagues with the training and resources they need to navigate both immediate and long-term challenges and opportunities. Our talent planning is enhanced by Group-wide leadership development programmes, co-designed with IMD and INSEAD.

As an engaged investor, Jardines expects each of its portfolio companies to foster an inclusive and diverse culture, where everyone has the opportunity to succeed. Our portfolio companies have each established targets aligned with this objective.

Influencing portfolio company strategy and supporting performance through board representation

During 2024, and as we enter 2025, our portfolio companies have developed and adopted revised strategies. As an engaged investor, we have used our representation on the boards of each of our portfolio companies to influence and support this process. Our portfolio companies are now focused on implementing their new strategies and improving performance, with an emphasis on enhancing operational efficiency and a strong focus on sustainability. This has again been with support from Jardines, and there has been good progress in the year in bringing in non-executive directors with industry expertise and experience, to create a framework to support management in driving operational excellence and increased productivity.

As an engaged investor, we expect sustainability to be a key strategic priority for our portfolio companies, each of which has developed and is implementing its own tailored sustainability agenda. They also set relevant targets and collect and consolidate data to track their performance, and are accountable to their respective boards for reporting progress.

Decisive portfolio management at the Corporate level, built on disciplined capital allocation and investment expertise

We see the continuing evolution of the Group’s portfolio as vital for securing long-term sustainable growth. Capital needs to be directed towards strategic growth projects at both the Group level and within our portfolio companies, and we expect assets that are non-strategic or yield lower returns to be divested.

The Group’s presence in a wide range of markets and sectors across Asia has allowed us to deliver resilient performance, even under tough market conditions. As an investor, we see great opportunities for our portfolio companies to reinforce and further enhance their standing in the high-potential markets in which they operate, and in sectors where they can achieve leadership, aiming to generate long-term value and maintain sustainable growth.

Our investment strategy focuses on building the Group’s presence in regions with significant growth potential, particularly in emerging Asian markets, and we believe that there are strong growth prospects for our Southeast Asian businesses in Indonesia and Vietnam. We also recognise the potential in our established markets, including Hong Kong and Singapore, which offer a stable base and robust cash flows, and we are confident that our businesses in these markets have excellent opportunities to drive strong business performance.

Our capital allocation approach emphasises organic investment across our portfolio companies to fuel long-term growth and returns, together with plans to gradually increase dividends. We prioritise investment in new business opportunities and support the carrying out of share buybacks where appropriate. Our approach is backed by a strong balance sheet, and we are increasingly focused on ensuring that our investment opportunities are aligned with our sustainability objectives.

Summary of performance

The Group delivered a resilient performance in 2024 in the face of difficult trading conditions across many of its markets. Underlying net profit fell by 11% to US$1,471 million.

The fall in profit was largely driven by a significantly lower contribution from Zhongsheng and a reduced profit from Hongkong Land as a result of the non-cash impairments it incurred in respect of its Build-to-sell segment on the Chinese mainland. Contributions from JC&C and JP were also moderately lower and Mandarin Oriental’s results were in line with the prior year, but there were stronger performances by both DFI and Astra, with the latter delivering a record contribution supported by an increased JM stake in JC&C.

Full details of the performance of each of our portfolio companies are provided in the ‘Portfolio company review’ section.

There were net non-trading losses in 2024 of US$1,939 million, consisting primarily of fair value losses of US$1,209 million arising from the revaluation of the Group’s investment properties portfolio, impairment of goodwill and the interests in associates totalling US$568 million and other non-trading items of US$251 million, offset by gains of US$89 million on the sale of properties and revaluation of other investments.

Cashflow remained strong both at Group and parent company level. The Group’s cashflow from operating activities for the year was 9% higher at US$5.0 billion (2023: US$4.6 billion) and free cash flow at the parent company¹ was 12% higher at US$875 million (2023: US$778 million), providing 2x cover for the Company’s external dividend payments. The Group’s balance sheet remains strong with gearing of 14%, slightly down from 15% at the end of 2023, reflecting strong operating cashflows and lower capital expenditure by portfolio companies.

The Group continued to focus during 2024 on making organic and strategic investments to sustain the business and drive future growth. The Group’s organic capital expenditure in 2024, including expenditure on properties for sale, was US$2.3 billion (2023: US$3.4 billion), and strategic investments added a further US$1.1 billion (2023: US$1.8 billion) to capital expenditure in 2024. Additional capital investment within the Group’s associates and joint ventures was over US$5.3 billion (2023: US$5.2 billion). The Group continues to invest for the long-term and ensure that its businesses have the resources to drive future growth.

These results demonstrate, once again, the value of our diversified portfolio, enabling Jardines to produce a resilient profit and cash performance, despite challenging conditions in a number of our sectors and markets.

The resilient performance of the Group’s businesses in Indonesia, together with the challenges faced by our businesses in Hong Kong and on the Chinese mainland, led to 66% of the Group’s profit for the year coming from Southeast Asia and 28% from China.

We have set challenging financial objectives to drive future growth and deliver superior TSR.

As a long-term investor, we will continue to focus on building bigger, stronger businesses which deliver high-quality, sustainable growth in earnings and cash flows, and driving returns on invested capital well above the relevant weighted average costs of capital. We will also continue to evolve our portfolio with a view to delivering higher long-term returns and capital appreciation. With high-quality execution in our portfolio companies and at Group, we intend to deliver superior growth in the Group’s NAV per share, as well as continued growth in the Group’s dividend.

Outlook

The Group’s overall performance in 2024 was resilient in a challenging market environment, as we benefitted from our diversified portfolio.

With enhanced boards, strengthened leadership teams executing new strategies across our portfolio companies, and a sharpened focus going forward on shareholder returns, Jardines is well-positioned, as an engaged investor, to take advantage of opportunities for mid- and long-term growth. In the coming year we expect broadly stable results, excluding the impact of the Hongkong Land impairments in 2024.